US worker productivity grew 1.9 pct. rate in Q3

Associated Press Modified: November 1, 2012 at 10:33 am •  Published: November 1, 2012

WASHINGTON (AP) — U.S. worker productivity grew at the same modest rate this summer as in spring, a sign that companies may be nearing the limits on how much output they can get from their employees.

The Labor Department said Thursday that worker productivity increased at a modest 1.9 percent annual rate from July through September, matching the April-June quarter rate. Labor costs fell at a 0.1 percent rate after having risen at a 1.7 percent rate in the second quarter.

Productivity is the amount of output per hour of work. Weaker productivity can be a hopeful sign for job creation. It often means companies can't squeeze much more output from their staffs and must hire to meet demand.

Over the past year, productivity has risen just 1.5 percent. That's half the average growth that companies saw in 2009 and 2010, shortly after many laid off workers to cut costs during the Great Recession.

Economists predict worker productivity will slow for the rest of this year and through 2013. Higher productivity is typical during and after a recession, they note. Companies tend to shed workers in the face of falling demand and increase output from a smaller work force. Once the economy starts to grow, demand rises and companies eventually must add workers if they want to keep up.

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